Last week, the U.S. Securities and Exchange Commission (SEC) announced charges against four individuals for their roles in Trade Coin Club (TCC), which the SEC describes as “a fraudulent crypto Ponzi scheme that raised more than 82,000 bitcoin, valued at $295 million at the time, from more than 100,000 investors worldwide.” According to the complaint, TCC was a multilevel marketing program that operated from 2016 through 2018 and promised profits from the trading activities of a purported crypto asset trading bot. Defendants told investors the bot made “millions of microtransactions” every second and that investors would receive a minimum return of 0.35 percent daily. However, according to the SEC, instead of investors' funds being deployed for the purported bot, they went into the pockets of defendants and other TCC promoters.
In a similar action, last week, the Commodity Futures Trading Commission (CFTC) issued an order indicating that Jeremy Rounsville defrauded investors through his company, Arbitraging.co, which also purported to have a “highly advanced arbitrage bot” that executed the company's complex digital asset trading strategies. However, according to the CFTC, the bot never executed any trades; customers were unable to make withdrawals and lost all of their funds. The order requires Rounsville to pay a $177,000 civil monetary penalty, permanently bans him from soliciting or trading in commodity interests and virtual currencies or registering with the CFTC in any capacity, and requires him to cease and desist from any further violations of the Commodity Exchange Act and CFTC regulations.
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